Federal Deposit and Share Insurance: Proposals for Change

Publication Date: June 2005

Publisher: Library of Congress. Congressional Research Service


Research Area: Banking and finance



Deposit insurance for holders of accounts at banks and thrift institutions has been under scrutiny for the last several Congresses. Successive Congresses have seen introduced legislation to change the pricing of insurance, the coverage for customers' accounts, and the finances of the insuring Federal Deposit Insurance Corporation (FDIC). Changes could affect the condition of insured depository institutions, the strength of the insurance funds, and competition among financial institutions. Increases in some kinds of financial risks have led some to suggest that deposit insurance may need reform.

The 108th Congress reexamined these issues. H.R. 522, the Federal Deposit Insurance Reform Act of 2003, revisited an even earlier House-passed measure. It sought to restructure the FDIC, change the pricing of insurance, increase basic peraccount coverage to $130,000, indexed for future inflation, and increase insurance of municipal deposits. H.R. 522 passed the House on April 2, 2003, but went no further. In the 109th Congress, H.R. 1185, the Federal Deposit Insurance Reform Act of 2005, received approval from the House by 413-10 on May 4, 2005. The Administration continues to support reform in similar terms, but opposes raising basic coverage of accounts to $130,000. This report will be updated as warranted.